Becoming a homeowner is an incredible privilege but it is also a major financial commitment. Making sure you have a substantial amount of savings is one thing that most Burlington mortgage brokers look for in their applicants. Another major deciding factor on whether or not your loan application will get approved is dependent on what your current credit score is.
So, to help provide some clarity, our team of professionals at Loewen Group Mortgages have listed how your credit score can affect your mortgage.
What Is A Credit Score?
In Canada, your credit score is a number between 300 and 900 that is calculated by two main credit bureaus, Equifax and TransUnion. This number is given to each individual based off of their financial status. This depends on your financial history, the amount of debt you have accumulated and how long you have been opening lines of credit. Your score can also increase or decrease depending on specific factors.
Factors That Affect Your Credit
Your credit score can be negatively affected by the amount of debt you are and if you miss a payment on your Burlington mortgage. Every time you open a line of credit your score will drop, even if only temporarily. Your score will also drop if you owe money, regardless if it is for credit cards, a car loan, a mortgage, or student loans, and you refuse to pay it off.
Having a low credit score can affect many things such as your ability to qualify for a mortgage. The lower your score is, the more of a high-risk borrower you appear and the less like your loan application will be approved. A broker’s main concern when lending money is whether or not the borrowers will pay back their loan. Therefore, the lower your credit score, the riskier you are to lend money to.
So, if you are applying for a mortgage, make sure you have a decent credit score. Ways to help raise your score include paying off high-interest debt and avoiding opening additional lines of credit until after your application has been approved and your loan has been finalised.
For more information on how a credit score can affect your mortgage or to get started on your Burlington mortgage application, please contact the Loewen Group Mortgages Team at 289-337-4029.